Recycling Christchurch. Gareth James General Manager Transpacific Waste Management South Island 5 October 2011

Transcription

1 Recycling Christchurch Gareth James General Manager Transpacific Waste Management South Island 5 October 2011

2 The scene 22 February earthquake destroyed most of the CBD and much of Christchurch eastern residential suburbs 1000 CBD commercial buildings to be demolished Up to 500 commercial buildings outside CBD also Up to 18,000 houses may be demolished Civil Defence Emergency Management (CDEM) estimated 4 million tonnes of building demolition material 2

3 Content Initial Concept Civil Defence reign Goalposts shift transition period Revised Concept CERA reign Focus on: Policies Processes Economics Commercial realities Politics 3

4 Initial policy CDEM commenced the recovery planning processes within days of the earthquake A fast track programme envisaged for urgency to clear city Drop and haul policy to remove material from CBD asap Commitment to maximising resource recovery via centralised processing facilities Recovered material to be used in the rebuild 4

5 Initial request CDEM invited TPI to joint venture with Ecocentral to process demolition material CCC Burwood closed landfill site lease offered for 5 years up to 15,000 tonnes per day during CBD clearout expected one truck every 30 seconds TPI invited Frews Construction to participate 5

6 Joint Venture formation 3 way unincorporated joint venture formed urgently, with partners; Transpacific Waste Management (TPI) Ecocentral (CCC recycling/transfer company) Frews Contracting Ecocentral admin, weighbridge, finance, sales Frews - stockpiling, heavy coarse sort TPI - fine sort processing, residual waste to landfill Fully operational for receipt of material by 7 March (12 days post-quake) 6

7 Aim best overall outcomes from demolition Minimising residual waste to landfill Maximum recovery of useful resources for rebuild Rapid removal of demolition material Protect health and safety Use local contractors & labour Completing in the fastest possible time Cost effective, minimising overall costs Safe, permanent, appropriate disposal of residual Minimise effects of transport on community 7

8 Initial expected demolition waste flow One or two other processing sites (?% recovery) 4 Mt of demolition material 1.5 Mt Burwood processing site (75% recovery) 0.4 Mt Kate Valley Landfill Cleanfills 8

9 Initial conditions 1.5 Million tonnes assumed to go to Burwood Assumed 1 Mt of clean material would go to cleanfills Assumed other processing site(s) would share balance Material composition as per CDEM advice 75% recovery by weight achievable at Burwood Residual waste to Kate Valley Landfill (KV) Drip feed at rate that is within KV daily capacity 9

10 Process Receipt phase stockpile incoming material rough pre-sort of heavy material Coarse sort phase mining of stockpile remove large components residual to processing plant Fine sort phase plant sorting process 10 products off sort line residual to Kate Valley Sale/diversion of recovered material 10

11 Transpacific processing plant significant investment in plant and equipment design of sort plant to achieve 75% diversion of material composition as advised by CDEM Picking station components 11

12 Transpacific processing plant 12

13 Transpacific processing plant operation 16 hour, two shift, 6 day week operation 40 tonnes per hour on sort line Approx 30 staff (50% on sort line) Mobile plant loaders, excavators, dump truck 3 line haul truck and trailers 13

14 Original financial model economics Original financial model scenario 1.5Mt of demolition material 75% recovery of reuseable resources Original economics Gate charge of $90 per tonne Gate charge revenues do not fully cover operating costs Balance and profit from sale of steel Liability incurred to process material irrespective of whether income was adequate Assumption that MFE Waste Levy waiver will continue to apply to earthquake waste 14

15 Risks of original economic model Investment necessary before certainty of volume Must set a gate charge to cover costs of processing: before it knows how much material it will receive or what the composition of the material is or what the recoverable and reusable proportion is or what the value of recovered material may be in future or what demand might be when it is eventually available to the market No ability to reset charges if assumptions incorrect Cherry picking of valuable material by demolition contractors Consent issues and requirements unknown Future commodity prices & market conditions unknown 15

16 Tonnes Goalposts start shifting Government establishes CERA Demolition process in limbo May-June awaiting CERA establishment and decisions Three major changes Hiatus allowed cherry picking Mixed Demolition Material Decision to allow clean rubble material into Lyttelton Harbour reclamation at no disposal charge Revised CERA estimate of material composition and quantity from CBD demolition Project now primarily debris management rather than recycling 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Series1 16

17 Comparison of material composition estimates Building Composition (by weight) CDEM Original CERA Revised Wood - treated 8% 15% Wood - untreated 3% 5% Brick 30% 21% Concrete 28% 17% Clay tile 1% 1% Metals 11% 2% Glass 7% 3% Plasterboard 4% 5% Fittings 3% 3% Reuse items 4% 4% Non-recyclables 1% 24% Totals % % 17

18 Revised concept Focus on debris reduction Quantity of material expected lower 1Mt instead of 1.5Mt Quality of material lower 50% recovery only achievable (cf 75% before) Substantially less value in recovered material (steel) Operating costs similar Sale revenues lower Gate Charges must increase to avoid losses Other risks same as for original 18

19 Revised expected demolition waste flow 21+ smaller unconsented processing sites (?% recovery)? Mt Disposal sites not known 4.25 Mt of demolition material 1.0 Mt?Mt Burwood processing site (50% recovery) 0.5 Mt Kate Valley Landfill Lyttelton Port reclamation 19

20 Impacts of shifting goalposts Financial loss at $90/t charge Large financial risk even with gate charge increase Ecocentral pull out of JV Less sales due to revised composition Risk outweighs potential reward Frews pull out of JV Financial risk too large for them Prefer to be a subcontractor to TPI BRRP now a wholly owned subsidiary of TPI 20

21 Balancing act for TPI TPI should make a fair return on its work at Burwood TPI does not want to earn more than a fair return With the large unknowns, TPI need to set gate charge to avoid a loss if worse outcome than expected whilst also avoiding over-recovery if better outcome than expected $120 gate charge best balance between risk and reward TPI desire to share risks/rewards through partnership 21

22 Current position For the project to continue, 2 key risk mitigation actions are necessary: gate charge to increase from the initial $90/t to $120/t > Still lower than public charge of $187 per tonne > Will look at lower charge for sites that drop and haul find a partner for TPI > to return to a risk/reward sharing JV 22

23 Revised financial model economics Revised financial model scenario 1.0Mt of demolition material 50% recovery of reuseable resources Revised economics Gate charge of $120 per tonne Gate charge revenues now cover operating costs No net earnings from sale of steel and other recoverables Potential risk of loss remains BRRP invited CERA independent review of financial model Office of the Auditor-General verified model as reasonable and in line with market 23

24 Revised joint venture option TPI investigating potential JV partners Insurance industry Building owners Demolition contractors Public agencies 24

25 Consents Order In Council (OIC) Ministry for Environment, CCC, CERA and Environment Canterbury worked together on OIC Covers all BRRP activities July announcement by Minister decision on OIC Provides a fast track process for regulators to consider consent applications from BRRP 25

26 Programme OIC July 2011 Joint Venture Establishment asap Plant commissioning 6 months after JV established Receipt phase To July 2013 expected but could be longer Processing phase Fully operational in early 2012 To at least March

27 Other Burwood earthquake recovery activities Silt 500,000 tonnes stockpiled Material from roading repairs Reprocessing of mixed aggregates for reuse Sewage Contaminated soils from sewer cleanouts Asbestos pipes Burial of replaced AC pipes in old landfill Liquid wastes from sewer cleanups Dewatering and bio-solid treatment and storage Storage of material from sensitive buildings 27

28 Thank you for your time 28